The internet of things and the capability to connect to the internet suddenly brings all kinds of new implications for products and their value.The internet of things is fundamentally changing how products function and how customers derive value from them.
How the internet of things is changing products and impacting what customers perceive as product value
Products today are becoming a combination of physical components, smart components, and connectivity components. Each of the 5 layers of the IoT stack plays a role — core product infrastructure, sensor systems, connectivity, analytics, and smart applications on an IoT platform.
While all three elements — Strategy, Connected Things, and true IoT platforms — seem somewhat elemental, balancing these will be central to the success of any IoT enabled business initiative.
For instance, look at a simple product, such as the light bulb.What is the product? In this case it’s the light bulb itself.What is the value of the product? I’m not talking about the monetary value, but rather the reason, need, or problem that drives the product purchase in the first place.
You might say in this specific case, the value of the product is the light that it provides, the illumination it creates, or perhaps the extension of functional hours it delivers.
What if we were to add connectivity to the product?By using an app on a device that controls the bulb via Bluetooth connection, you could now change the color of the light remotely.You could control the function of the light bulb with the sound of your voice.You could use the products new functionality to simulate the sunrise and replace your alarm.You could even sync the bulb to reflect your fluctuating stock prices! There’s a host of applications now available – just for a single light bulb.
Revisiting the original question, evaluating your new connected light, what is the product?Is it still just the bulb? What about the app that controls it, or the device that supports the application?It’s really an interesting question to consider.It’s really an interesting question to consider.For this same connected product, let’s talk about its value.
Again, I’m not talking the connected product’s monetary value, but rather the reason the product would be purchased in the first place.Would it still be just for the light or illumination, or is it the array of colors, new features and functionality?The fact of the matter is – the value of the product has changed.The connected product now adds value in the form of light, remote control, entertainment, and even overall experience.
Products and their value are changing
As a consumer shopping for an original bulb, you were most likely looking for a certain wattage or color (such as yellow or white) – not an experience.The connected product now adds value in the form of light, remote control, entertainment, and even overall experience.
Now that products are changing and you have systems of products: an app, a bulb, connectivity; the product value changes as well.You now have the ability to look for a light that can be synced to music or sound. A light that simulates the sunrise. A light that you can control from your device.You now need to weigh product value against a slew of new price points, features, and the support the manufacturer will provide over the years.
There’s no question that the value of products is changing because products themselves are changing. We’d like to help you map out this new world.If you’d like to do anything from brainstorm potential impacts to your business, develop a full strategy for IoT at your organization, create proof-of-concepts, or implement underlying technology… you’ve come to the right place.
We’re your partner in the ever-changing world of the internet of things.
Smart devices and connected products, like the Apple Watch, raise an interesting question, what are the implications of transforming traditional products into smart connected products?
Now that we have sensors, connectivity, big data, and analytics, customers and businesses are leveraging this value to create new opportunities – here’s how.
Remote Operations
Connected products can share their data with their users, and likewise with the manufacturer, unlocking new service opportunities.
For example, I have the Nest thermostat in my house. I can adjust the temperature on my way home from work just but using a simple app control.
For a Minnesotan like me, this is pretty awesome when you experience winters like we have.
Remote Services
From a company perspective, remote access services are very valuable as well.
For example, just like a smart thermostat, manufacturers can automatically send updates to assets. Or if maintenance is required, technicians can often save time and money by remotely connecting to devices to ensure software and hardware are performing effectively. This can avoid unnecessary service calls.
Innovative Product Designs
Another great use case is how companies can change their product design strategies.
For example, IoT enables a new design strategy known as evergreen design. The premise is that when products are operating in the field, new software features can be built and delivered to a device to extend functionality and the usable life of a product. The Tesla car illustrates this concept well. Tesla actually used an evergreen design strategy to avoid a major recall.
A few years back, there were several instances in which the battery cell of the car actually rubbed against street curbs as the car turned corners, causing fires. Instead of sending all the Tesla cars back to the dealer, or a mechanic shop, the company sent a software update that automatically raised the clearance of the car chassis where the battery was located.
Tesla’s evergreen design saved the company money, as well as customer time, and money associated with a traditional recall.
Big Data Analytics
Another big game-changer in business is the value to be had from big data. Now that products can share information throughout their product development cycle and useful life, there is, in essence, a stream of data that we can collect, analyze, and use to inform all sorts of business decisions.
Wouldn’t it be nice to know when the average daily usage of your products or product segments is in decline or incline? It could drive new product innovation timelines, customer success strategies, and new revenue from cross-sell and up-sell.
Data Collection & Analysis of Consumer behavior
The practice of using big data is not new. For example, in the retail market, companies are using purchasing behavior data to inform their business decisions.
A great example comes from 2004 when Walmart conducted a big data study on customer purchasing behaviors prior to hurricanes.
What they found was surprising. A few days prior to the forecasted hurricane, people bought a significant amount of pop-tarts. In particular, strawberry pop-tarts. On the day of the hurricane, they bought more beer. Based on this data, Walmart adjusted their stock supply in anticipation of the new demand. This use case is unique in that data was originating from people’s shopping behaviors. What is different now is that we can collect and analyze data from products as well.
Remote Monitoring
Take the case of smart sports equipment. A friend I play golf with had a sensor attachment that told her about her swing, ball placement, and field location. So, as we were playing throughout the day, she was pulling out her golf app, observing her golf swing, and adjusting performance based on that data. This is great for the user, and there are also added benefits for the manufacturing company!
For example, the tennis racket company Babolat has sensors attached to their play pure drive product, which collects data about a player’s swing, the speed of their ball, and impact location.
Product to service transformation
Babolat also provides a training service, where based on the player’s performance, Babolat will provide consulting, hitting tips, and other development programs. In this use case, big data is transforming a traditionally hardware-oriented company into a service company as well.
This brings me to my last example, which illustrates a radical change in how businesses perceive product value.
Product-as-a-Service (PaaS)
Namely, products are now carriers for potentially limitless services based on how you creatively leverage their smart and connected elements. This concept is not new.
Products-as-a-Service have been pioneered in the aerospace industry.
For example, Rolls Royce licenses out their engines to airline customers, and they charge airlines for the millage of the planes as well as services associated with repair, and maintenance.
This is generally known as power by the hour. This product as a service concept is gaining a lot of attention in the IoT market.
For example, there is a big software battle for ownership of the car segment. Google, Apple, Microsoft, and the original car makers are attempting to get a slice of the services associated with cars, such as navigation, entertainment, and safety systems. This new service focus is really interesting for product development and associated business operations.
Bottomline – products are carriers of tremendous value. Now that we have sensors, connectivity, big data, and analytics, customers and businesses can leverage this value, and create new opportunities.
IoT Intro Class
At EAC, we want to make sure you don’t miss out on any revolution with respect to potential capabilities that you can add to your products- while we also realize the importance of basing your IoT initiatives around your mission statement. That’s why we created what we call our IoT Development Workshop.
We have made it our mission to help guide organizations like yours to explore and embrace the uncertainty of the emerging IoT market.
The internet of things (IoT) is a business and technology revolution. It not only enables the connection and communication with ‘things’ but allows us to manage them.
It allows our organizations to do preventative and predictive maintenance on ‘things’, do guided service on ‘things’, and create digital twins of ‘things’. It enables us to improve operational efficiency, significantly reduce downtime, and to develop new revenue streams.
What makes up the ‘Internet’ in IoT?
The internet is composed of two separate communities; the internet of people and the internet of things or IoT.
The Internet of People
First, let’s break down what we mean by ‘the internet of people.’
The internet of people has grown organically over the past 20 years and has evolved into becoming an interconnected network of billions of people. That’s right, billions. Its primary purpose is to connect people, collate information, and enable people-to-people interaction.
The internet of people allows people to connect by becoming a clearinghouse of information. People post information available to other people, generating a great deal of information that is being pumped into the cloud.
The Internet of Things – IoT
The internet of things has been growing organically for the past 10 years and has the potential to become much larger than the internet of people. Its primary purpose is to connect machines, people, and data.
The IoT also enables people-to-machine and machine-to-machine interactions. In the Internet of Things, things are pumping data into the cloud so products can be monitored, controlled, optimized, and automated. During this process, information and data are streaming into the cloud from both people and things.
Combining the internet of people and things
This leads us to the internet. As mentioned earlier, the internet is the combination of internets of people and things into one integrated network. (Of course, they never were really separate, but it helps to think of them that way to facilitate the study of IoT).
Why are businesses investing in IoT?
The market for IoT is huge! Today there are over 20 billion connected devices, and that number is growing at an incredible pace. With connected devices comes a tremendous upside opportunity for IoT investments.
Through 2020, estimates are as high as 1.6 Trillion dollars! In fact, McKinsy has determined that the economic impact of IoT will top 11 Trillion dollars by 2025! The reason companies are starting to make such big investments in IoT is because so much value can be created.
How the Internet of Things is impacting product value
The internet of things isn’t about the internet – it’s all about the things. The things are what’s changing. The trend of smart connected things is really accelerating now that there’s a computer of sorts inside just about everything!
Today, according to the US government Census Bureau, there are about seven billion people on the planet Earth. About one-third of these people are connected to the internet with smartphones, tablets, and computers- yet in 2010 we hit an important milestone where there were more things connected to the internet than there were people on Earth This suggests these connected ‘things’ aren’t just smartphones, tablets, and computers anymore – they are fitness bands, thermostats, vehicles and more! This is where real innovation is happening.
Today, almost everything we have around us is capable of connecting. I’m talking about buildings, appliances, machinery, farms, hospitals, cities – all kinds of things. Now there’s a massive investment that is feeding this rapid expansion of the smart connected products – the internet of things solutions market. The IoT solutions market includes the smart connected things, the connectivity services, the software platforms and applications, the security, the analytics, and really everything related to smart connected products.
IoT Development Workshop
At EAC, we want to make sure you don’t miss out on any revolution with respect to potential capabilities that you can add to your products- while we also realize the importance of basing your IoT initiatives around your mission statement. That’s why we created what we call our IoT Development Workshop.
We have made it our mission to help guide organizations like yours to explore and embrace the uncertainty of the emerging IoT market.
